Relinquish don’t renounce, if you can

Please Note: The US State Department under John Kerry, who served in Viet Nam, is now charging $2350 to receive any CLN whether one has relinquished or renounced. So if you are coming to this only now, you are SOL when it comes to getting a free CLN.

Those of us who have participated in the Expat Forum have seen that one of the first things that many many newbies say is, “I am going to renounce my US citizenship as soon as I have my Canadian citizenship.” Now, I want to suggest that one should never renounce their citizenship if they can relinquish it instead. Months ago I wrote a post on this subject, which I provide below.

But first, some explanations: Renouncing is one of seven ways to lose your citizenship. It requires swearing an oath in front of an official of the US government and it now has a $450 fee attached to it. Relinquishing does not require a US government official, for it is one of several acts that a US citizen can perform that can result in a loss of citizenship, provided the person intends to lose it. Then, the former citizen must only inform the State Department, not so as to validate the relinquishing act, but to make sure that the US government understands what your intent was when you performed it.

It has become clear that there are several advantages to relinquishing over renouncing:

(1) Relinquishment takes the act of losing your citizenship out of the hands of the US government. This has two benefits. (a) There should be no fee because it doesn’t require a US government official–it doesn’t take place in a US Consulate–you only go to the consulate to inform them of a fait accompli, and it only takes one visit, unlike renunciation which usually take two visits. (b) This saves you $450, or it should, because you are not requiring the services of the Consulate–you are there only to inform them of your intention when you committed a potentially expatriating act such as making a pledge to a foreign power.

(2) Relinquishment is usually a positive act which cannot be confused with an expatriation to avoid taxes. You do it so that you can take part in foreign government or to vote in the country you live in, not so that you can avoid US taxes.

(3) Relinquishment is not a renunciation of your citizenship, so much as a positive act vis-a-vis your new home and country. It is not a repudiation of your country but an acknowledgement that dual citizenship is an unworkable absurdity. Thus, relinquishment comes with less stigma, potentially.

Finally, a caveat is in order. Don’t do one thing and say another. That is don’t relinquish your citizenship then travel on US passport, pay tax in the US, register your children born abroad as US citizens, or take up a residence or a job in the USA, except as one holding a legitimate permit to reside or work in the US as an alien. If a person does any of these things, the State Department may not accept your relinquishment. Those who desire to lose their citizenship but who have done such things after the relinquishing act, may need to renounce their citizenship after all.

Section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481) governs how a U.S. citizen shall lose U.S. nationality. Section 349(a) states:

A person who is a national of the United States whether, by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality:(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense.

Now perhaps it would interest readers to know that this government website is not telling the whole story: The U.S.C. 1481 lists several other ways that a natural born US citizen may lose their citizenship. Here is the full text (emphasis mine):

(a) A person who is a national of the United States whether by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality—

(1) obtaining naturalization in a foreign state upon his own application or upon an application filed by a duly authorized agent, after having attained the age of eighteen years; or

(2) taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after having attained the age of eighteen years; or

(3) entering, or serving in, the armed forces of a foreign state if

(A) such armed forces are engaged in hostilities against the United States, or

(B) such persons serve as a commissioned or non-commissioned officer; or

(4)

(A) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state; or

(B) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years for which office, post, or employment an oath, affirmation, or declaration of allegiance is required; or

(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or

(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense; or

(7) committing any act of treason against, or attempting by force to overthrow, or bearing arms against, the United States, violating or conspiring to violate any of the provisions of section 2383 of title 18, or willfully performing any act in violation of section 2385 of title 18, or violating section 2384 of title 18 by engaging in a conspiracy to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, if and when he is convicted thereof by a court martial or by a court of competent jurisdiction.

(b) Whenever the loss of United States nationality is put in issue in any action or proceeding commenced on or after September 26, 1961 under, or by virtue of, the provisions of this chapter or any other Act, the burden shall be upon the person or party claiming that such loss occurred, to establish such claim by a preponderance of the evidence. Any person who commits or performs, or who has committed or performed, any act of expatriation under the provisions of this chapter or any other Act shall be presumed to have done so voluntarily, but such presumption may be rebutted upon a showing, by a preponderance of the evidence, that the act or acts committed or performed were not done voluntarily.

I swear or affirm that I will be faithful and bear true allegiance to her Majesty Queen of Elizabeth the Second, Queen of Canada, Her Heirs and Successors, and that I will faithfully observe the laws of Canada and fulfill my duties a Canadian Citizen.

I will therefore have committed the first two acts listed of a possible seven which make it clear that I am no longer an American citizen. No oath before a consular authority is necessary according to the current statute. As evidence of this act, I will create a video tape before swearing that my intention in taking the oath of Canadian citizenship is to relinquish my American citizenship.

An individual who has performed any of the acts made potentially expatriating by statute who wishes to lose U.S. citizenship may do so by affirming in writing to a U.S. consular officer that the act was performed with an intent to relinquish U.S. citizenship. Of course, a person always has the option of seeking to formally renounce U.S. citizenship abroad in accordance with Section 349 (a) (5) INA.

This website thus verifies that the act of taking the oath of citizenship in Canada, if done with the intent of relinquishing US citizenship, counts as one of the seven ways of losing one’s US citizenship according to USC 1481.

Update 2: Today a consular officer called me from the US consulate in Toronto. She confirmed what I’ve said in this post, that relinquishing US citizenship and renouncing US citizenship are two different processes that are treated in a different manner by the consulate (including the fee structure).

520 thoughts on “Relinquish don’t renounce, if you can”

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What has changed to make your situation desperate? You’ve been in UK for 50 years, minding your own business and traveling to the US every few years. You’ve had 2 US passports since 2002 but don’t say if you have a current one or not.
You could carry on and do nothing unless there is a reason you haven’t mentioned.- you won’t be arrested- the vast majority of reports are that duals are traveling on their other passport every day with no problems; a few report that they have been told they need to get a US passport.
You could renew your US passport and try to become US tax compliant. (probably thru the so called streamlined programme)
You could keep your appointment to renounce. You then would have to decide whether or not to file 5 years of taxes and the exit form 8854. If you do decide to file both you would be free and the cost in time and trouble would be the same as the streamlined path.

If you renounce and don’t back file taxes, you become a covered expatriate. It’s not at all clear what that means. Probably not much at all for average Brits living in England.

It’s a lot to digest. Try to decide what you want, what you can tolerate and what is best for you. Phil Hodgen has a feature on what to do if you are ‘too poor’ to afford an accountant but still want to get onside with the IRS. You should read it. I don’t necessarily agree with his conclusion- I believe most of us who are ‘too poor’ can afford to take the risk and do nothing.

@Yorkshiremaid.
Do I understand that you didn’t have a US passport for 30 years after becoming a UK citizen and used your UK one to travel to the US? We’re you badgered into applying for another US one by an over zealous US border official? If so you could try to argue for a past relinquishment if it was your intention to give up US citizenship when you became British. This would excuse you from all the back tax filing. Some here have argued the case successfully. You could change your appointent to a relinquishment, but I am not sure of the info you have already given to the embassy. If relinquishment is refused due to the passport issue you can then renounce. You will then have until next June to get your back tax filings and 8854 in order. No need to cancel the appointment.

@Yorkshiremaid
Another consideration if you decide to renounce and become tax compliant (to avoid covered expat status) is the filing of the 8854.
This form asks you to assess your net wealth on the day BEFORE renunciation. If you think that your net wealth is over $2,000,000 you may be able to move or gift some to your non US spouse or children. Obviously you will need more than two weeks to do this, if this is the case you may want to delay your appointment.

This summer, my husband and I submitted the required documents to the Halifax US Consulate, under the guidance of a lawyer, to relinquish our US citizenship. We became Canadian citizens in 1983, not realizing there was a need to acquire a document stating our relinquishment of US Citizenship. We just got a call from our lawyer, saying that a fee of $2300+ USD has been instituted effective Dec. 9, 2015, but we can’t get an appointment with the consulate before that date. Needless to say, I am beyond angry. Anybody have any advice or consolation?

@Jeanne
The advice: I assume your relinquishments will be recommended to State by the Consulate officer. But if the Consulate officer rejects, insist that your case be forwarded to State anyway. State are the decision makers, and sometimes decide in favour of relinquishments even if the Consulate officer recommends against.

Fighting for the relinquishment is important, because all experience to date is that with a relinquishment that far back you can safely ignore the supposed tax filing obligations.

Furthermore, don’t let your hired lawyer stampede you into the tax compliance mill unless you yourself have thoroughly researched your options on the subject and have yourself come to the conclusion that (the probably unnecessary) compliance is the best path for you.

The consolation is that $2,350 X 2 is still a bargain for getting out of U.S. expat tax hell.

@ Jeanne
The Halifax Consulate has been known as one of the better ones to relinquish or renounce so all I can suggest is e-mailing them to say you could take a cancelled appointment (if one comes up before Dec. 9th) … as long as you and your husband are in a position to get there on short notice. Generally though there’s no budging the consulates into picking up the pace to accomodate more CLN seekers and now they are motivated to push relinquishers into the pay the fee portion of their calendars. Some people consulate shop for better dates but that means travelling longer distances. One Brocker went to Mexico.

Jeanne. The fee is to process your CLN. Ask yourself, do you really need them? If so, the fee is a nuisance but worth it. Since you relinquished as of 1983, there are NO tax filing requirements- NONE. There is no reason whatsoever for your relinquishment to be refused if it was your intent to lose US personhood.

Unfortunately, the fee for CLN for claim to relinquishment goes into effect NOVEMBER 9, 2015, scant days away. There would still be a very slim chance for a cancellation somewhere I suppose. The fee for both will be, going forward, (until the next increase) US$2,350.00.

In the latest Schedule of Fees for Consular Services to be published in the Federal Register on Tuesday (80 FR 53704, 53707), Under Secretary of State for Management Patrick F. Kennedy or one of his ghostwriter minions proclaims:

Currently, nationals who renounce nationality pay a fee of $2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality, do not pay a fee. However the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.

In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time consuming of consular services, it was rarely performed so the overall cost to the Department was low and the Department did not establish a fee. Requests for a Certificate of Loss of Nationality on the basis of a non-renunciatory relinquishment have increased significantly in recent years, and the Department expects the number to grow in the future, causing the total cost of this service to increase. At the same time, the Department funds consular services completely from user fees. The Cost of Service Model continues to demonstrate that such costs are incurred by the Department when accepting, processing, and adjudicating relinquishment of nationality cases; therefore, the Department will collect a fee from all individuals seeking a Certificate of Loss of Nationality. Taking into account the costs of both renunciation and non-renunciation relinquishment processes, the fee will be $2,350.

If you do not need a CLN in the first place, nothing in the Immigration and Nationality Act requires you to obtain one to document your loss of US citizenship, and people who relinquished before 4 June 2004 did not have to report their relinquishment to the State Department in order to end their status as U.S. tax subjects either. However, FATCA regulations and IGAs require people with U.S. indicia to show their banks a CLN or provide a “reasonable explanation” of why they do not have U.S. citizenship.

See this earlier post for discussion of what banks might accept as a “reasonable explanation”, and let us know if you find a bank which will accept the absurd price-tag as an explanation of why you don’t have a CLN.

As stated above the new fees come in 09 November. Here is an alternative for anyone who just wants to get the process done (my full write-up is in the consulate directory for this group). The US Embassy in UAE (Abu Dhabi) was able to accommodate an initial appointment for renunciation within a week when I did it in 2012, and the second appointment a few days later since I had everything prepared for the consulate clerk in advance. If you can confirm an appointment date now, you can fly direct to Abu Dhabi on top-notch Etihad Airways from New York or Toronto in 12-14 hours, stay in a local 5-star hotel, even take in the Formula One race at the end of November. Airfare will be approximately CAD 1,500 to 8,000 each depending on cabin selected, daily accommodations and meals approximately CAD 300 for two, rental car or taxi CAD 35 per day. And, you get a nice vacation to the Arabian Gulf just when the weather is turning very mild (25-33 C daily). If this fits your plans, consider it – no savings, but no unnecessary lawyers, and at least you’ll have fun doing it.

What about US citizens who were not born in the USA? I was born in Canada. Lived here my whole life, have only ever worked here and have only ever held a Canadian passport. My mother (the IS citizen) applied for my citizenship when I was a toddler. And since becoming an adult have had nothing but annoyance after annoyance with being forced to file taxes in the USA when I was born in Canada and have NEVER lived or worked there. And why should I be required to pay to get rid of something I didn’t want? I should be able to just state that the applied for citizenship was unwanted and that I am a Canadian. Is there anyway to got rid of this without paying $3000 that let me tell you, I don’t have. And finding money to keep filling taxes to a country that I have nothing to do with and quite frankly a country that every year says I’m barely a blip on their radar because I have no money. Why should it be so hard to say, scratch my name of the list I don’t belong to you and never have.

Rebecca it certainly should not be a cost to you to renounce or relinquish a US citizenship that was not your own informed choice, without YOUR consent and which is non-meaningful to you, having never worked or lived in the US. Right now, though, that is the way it stands for you as our governments, both Canada and the US, fail to have meaningful legislation that makes sense for people like you. You are caught up in US exceptional citizenship-based taxation — US$2,350 fee for freedom through either renunciation or relinquishment.

Sadly yes I have. When the law changed forcing all citizens living abroad to file regardless of income, my mother, who until then had been told by the IRS for 30 years that she didn’t need to file, freaked out and insisted that I had to back file and file from then on. So I’ve been filing since 2004.

Rebecca. Two options. Renounce and file 8854. You are up to date so filing 1 or 2 more years shouldn’t be a huge burden. Or say F*** it and stop filing. If perchance they ask why you stopped (unlikely) tell them you didn’t meet the minimum requirements. What can they do? As you say you are a blip on the radar or as we say a minnow. They haven’t the resources to chase minnows.

I believe it is now written in the US passport and she has spent many hours on the phone and emailing the IRS who now all tell her she has to file. She’s different because she was born there and since her mothers death jointly owns farm land with her brother who lives in the USA. So unfortunately she has US income from renting it. She’s stuck. I however have no such ties. But that doesn’t seem to matter to the IRS.

I second Calgary’s suggestion to please consider offering to be a witness for the ADCS legal action. You are already in the IRS system so you don’t need to worry about having your name be made public (I am assuming that you are also filing FBARs).

Some of us would like to be witnesses but are not in the IRS system and need to stay under the radar with our banks to protect our families.

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